DISH dangles a sizeable offer to steal DirecTV customers

One day after introducing its new cable streaming TV service, Dish Network is making a new play for its rival’s customers.

A new Dish DISH campaign aimed at customers of satellite television provider DirecTV guarantees $250 in annual savings for those who switch to Dish.

Under the new promotion, DirecTV DTV customers can receive $250 in the form of a prepaid payment card if they switch to Dish in the next two months and don’t see at least $250 in annual savings during their first year of service, the company said. The promotional campaign, which asks DirecTV customers “Why pay more?”, runs through April 8.

Dish is announcing the offer at the same time as it rolls out its high-profile new streaming television service, Sling TV, which launched Monday. The the service targets cable cord-cutters by offering live, streaming television programming — with a handful of channels including ABC, CNN, TNT and ESPN — for $20 per month. Dish also said Monday that it reached a deal to add AMC to its core list of Sling TV channels. The inclusion of ESPN, especially, made Sling TV big news for cord-cutters because the sports broadcasting giant’s channels had not previously been available without cable subscriptions.

While Sling TV may convince some cable holdouts to cut the cord in favor of streaming content, Dish’s “Why pay more?” campaign looks to add more satellite television customers to the company’s subscriber base. In order to accomplish the latter, Dish will try to siphon customers away from its largest rival. DirecTV is the largest satellite TV company in the U.S., with more than 20 million subscribers, while Dish comes in second with roughly 14 million.

Fox could be the latest to settle an ad-skipping lawsuit with Dish Network

A two-year old Fox Broadcasting lawsuit over a Dish Network DVR service that lets its customers skip commercials when streaming recorded television shows may not make it to trial.

The two companies told a federal judge in Los Angeles Thursday that they wanted to pause the litigation about a month before the trial was set to begin. In a court filing, Fox and Dish called a resolution of the lawsuit “highly likely” after their resolution Thursday of a fee dispute that had blocked the Fox News and Fox Business channels on the Dish DISH service for more than three weeks.

The lawsuit dates back to 2012, when Fox FOX accused Dish of copyright infringement and breach of contract over the DVR service AutoHop — also known as the Hopper — which lets Dish customers skip commercials when watching recorded programming. The suit later added Dish’s Sling service, which lets customers stream programming on a computer or mobile device — and, which will soon offer a handful of cable channels for $20 per month.

After the U.S. Supreme Court’s June decision declaring Aereo — a service that let users stream broadcast television shows on a computer for a monthly subscription — illegal, Fox argued that Dish’s streaming DVR service should also be found to violate content providers’ copyrights. However, Dish countered that its service is different from what Aereo offered. “Sling sends content that is already paid for and lawfully possessed by the viewer; Aereo did not,” Dish said in a court filing last fall.

Fox is not the only broadcaster to take issue with Dish’s DVR service, as the satellite company has also faced similar litigation involving CBS CBS, NBC and the Walt Disney Company DIS. Last year, Disney and CBS both settled their lawsuits with Dish after each content provider also renegotiated their own network carriage agreements. NBC’s lawsuit is ongoing.

CBS, Dish reach agreement that ends blackout

After a 12-hour blackout, CBS programming has returned to Dish Network’s satellite television service after the two companies resolved a contract dispute.

The agreement early Saturday morning ended an impasse that had led to CBS-owned stations going dark Friday night for more than two million Dish customers. The two sides had disagreed over the fees Dish paid CBS for rights to its programming including popular broadcasts like NFL football, NCIS and The Big Bang Theory.

The satellite television service had briefly stopped carrying CBS-owned stations in 18 major metropolitan areas including New York, Los Angeles, San Francisco, Philadelphia and Denver. The blackout included a few independent stations and several others affiliated with the CW network.

The new multi-year agreement covers CBS stations along with the CBS Sports Network, Smithsonian Channel, TVGN and Showtime Networks. As part of the deal, Dish gets rights to broadcast Showtime online and to mobile devices. Financial details were not disclosed.

“We are very pleased with this deal, which meets all of our economic and strategic objectives,” said Ray Hopkins, president of television networks distribution for CBS. “We look forward to having DISH as a valued partner for many years to come.”

Warren Schlichting, senior vice president of programming for Dish, said “We are pleased to continue delivering CBS programming to our customers, while expanding their digital access to Showtime content through Showtime Anytime.”

Absent an agreement, Dish risked alienating customers who enjoyed watching CBS programming. It also comes just before a weekend filled with televised college and professional football, including the Southeastern Conference championship game Saturday that pits University of Alabama against University of Missouri.

CBS programming blacked out for millions of Dish customers

Dish Network no longer carries CBS programming in its lineup of channels, leaving millions of customers without easy access to the nation’s biggest broadcaster.

The satellite television service stopped carrying CBS programming in 18 major markets on Friday night after contract negotiations between the two parties reached an impasse.

Dish customers in cities including New York, Los Angeles, San Francisco, Boston, Chicago, Pittsburgh, Philadelphia and Denver are now left without programming from CBS-owned stations. The blackout includes a few independent stations and several others affiliated with the CW network. If the blackout continues, Dish subscribers will be unable to watch college and NFL football games along with popular series like NCIS, Two and a Half Men and The Big Bang Theory.

In a statement, CBS said it “has been negotiating a carriage agreement with Dish for six months and has already granted two extensions.” But it added that “during this time, Dish has dragged its feet at our many attempts to negotiate in good faith.”

Dish, which said more then two million of its 14 million subscribers were impacted, returned fire, laying blame entirely on CBS and a disagreement over the CBS Sports Channel, which remains available through Dish. With no agreement, Dish argued it no longer had legal rights to carry CBS programming.

“We are disappointed that CBS has chosen to black out their local channels, but remain optimistic that the channels will return quickly as both sides are continuing to work tonight to finalize an agreement,” Dish said in a statement.

CBS is seeking payment from Dish for access to its programming. In messages posted online, CBS encouraged its viewers to pressure Dish into an agreement.

“TAKE ACTION TO GET THE PROGRAMMING YOU PAY FOR BACK ON YOUR TV!” the message said. “Call Dish to demand they give you a rebate and return your favorite programs.”

For it’s part, Dish has its own campaign underway, via the website, Dishisonyourside.com. On it, Dish told its customers that “we are working around the clock and are hopeful that our customers’ CBS local channels will be restored as soon as possible.”

The impasse is risky for Dish, which could stand to lose legions of subscribers who are angry about being unable to watch some of their favorite shows. CBS, meanwhile, is losing out on millions of dollars in fees and ad revenue it would otherwise collect, although the amount pales compared to the company’s overall business.

Dish has occasionally dropped programming of other broadcasters after the two sides could not agree on a deal. For example, it dropped CNN and Cartoon Network from its lineup in October before restoring access a month later after the company reached an agreement with networks’ owner, Time Warner.

(This story has been updated with a response from Dish and additional information)

BSkyB to pay $8.3 billion for Fox’s TV assets in Germany, Italy

BSkyB plc said it has agreed to buy the German and Italian pay -TV assets of Rupert Murdoch’s 21st Century Fox , filling Fox’s war-chest as it closes in on a deal for rival Time Warner Inc.

If approved by regulators and shareholders, the $8.3 billion deal would also create the biggest pay-TV business in Europe, with 20 million customers and annual revenues of $19 billion.

Fox FOX is raising money wherever it can, against a background of rising speculation that it will make another approach for Time Warner TWX. An earlier offer of $80 billion was rebuffed by Time Warner’s management.

U.K.-based BSkyB BSYBF, itself 39.1% owned by Fox, will pay 2.45 billion pounds ($4.16 billion) for all of Sky Italia, of which GBP2.07 billion will be in cash and the remaining GBP382 million through the transfer of its 21% stake in National Geographic Channel International.

It will also pay GBP2.9 billion in cash for Fox’s 57.4% stake in Sky Deutschland, valuing it at €6.75 a share, roughly in line with its current market valuation. It will also extend the same offer to minority shareholders. Depending on how many of them accept the offer, the total bill for BSkyB could rise to GBP7.0 billion.

BSkyB will raise around a quarter of the money needed by selling 156.1 million new shares, worth around GBP1.4 billion at current prices. The rest will come from existing cash and new debt. Fox has already committed to subscribe to the share issue, but net debt will still rise to around three times current earnings before interest, taxes, depreciation and amortisation. That multiple could rise to four, depending how much cash it needs to buy out Sky Deutschland’s shareholders.

BSkyB said the deal would add to earnings per share within two years, with an increasingly positive effect after that. Its shares fell 2.6% on the news in early trading in London.

The offer values the sister companies’ subscribers at $1,489 each, compared to a valuation of $1,582 per subscriber at DirecTV.

Where does the DirecTV deal leave DISH Networks?

FORTUNE — As pay-TV services work to pair off — AT&T T has eyes for DirecTV DTV; Comcast CMCSA seeks to merge with Time Warner Cable TWC — one major player could be left without a partner. Dish Networks DISH, the nation’s second-largest satellite service after DirecTV, had tried to acquire Sprint S last year. But the bid failed. In the end, it was the Japanese telecom company Softbank that acquired a controlling stake in the third-largest American mobile carrier, leaving Dish to look elsewhere.

Immediately following the announcement of the AT&T-DirecTV deal, there was speculation that perhaps Verizon VZ, the nation’s largest mobile carrier, would find common ground with Dish. But Verizon’s chief executive, Lowell McAdam, quickly shot down rumors that the carrier was in potential merger talks with Dish.

“I know there are reports out there that we are talking to Dish. I can tell you now, that is someone’s fantasy. There were not, and there are not, discussions going on with Dish,” McAdam told investors at the J.P. Morgan Global Technology, Media and Telecom Conference. He added, “I don’t think owning a satellite company is something I’m interested in at this point.”

Although this suggests that a merger with Verizon isn’t in the cards, there has been renewed speculation that Dish could align itself with the remaining major mobile carrier in the U.S.: T-Mobile TMUS, the subsidiary of Deutsche Telekom that merged with MetroPCS two years ago. But there are rumors that a Softbank-led Sprint may acquire T-Mobile, creating a situation in which Softbank CEO Masayoshi Son again plays spoiler to Dish’s plans.

Dish co-founder and CEO Charlie Ergen hasn’t been shy in saying that the company would be interested in potential partnerships, even as regulators circle.

“To what degree of scrutiny a merger faces is going to be something of an ongoing debate,” said Chris Silva, research director for mobile and client computing at the market research firm Gartner. “There are so many factors now including the FCC’s net neutrality to the Aereo case that it is hard to know how any of this could play out.”

Dish may be desirable to a carrier such as T-Mobile as it could provide a non-traditional partnership.

“It could provide a small opportunity for those rural customers that can’t get broadband,” Silva said. “The prize becomes the extension that is that last mile of Internet access in rural areas. That’s something that might not be of interest for Verizon, but could be for T-Mobile as it looks to remain in the mind of consumers.”

The coupling of the pay-TV services is occurring for various reasons. Time Warner Cable and Comcast were never competitors because their respective markets did not overlap; that merger would create a nearly nationwide cable TV provider. AT&T’s interest in DirecTV is for very different reasons.

“What the merger will allow DirecTV and AT&T to do is to leverage the entities as one entity when negotiating content providers for retransmission and licensing fees,” said Andrea Marder, director of media planning and buying at Media Associates. “The deal goes beyond the content component. Although there will most likely not be any immediate changes, down the road it will allow DirecTV subscribers for the first time to be able to purchase a bundled multiple play package. The deal will also provide DirecTV the retail distribution of the AT&T outlets that it does not currently have.”

That could give DirecTV a significant boost, Marder said, and it “is initially estimated to grow their subscriber base by at least 5 to 10%. It will be perceived by current subscribers as an added value and by prospects as an enticement to sign up for a subscription.”

Any partnership with Dish could be motivated by the company’s wireless spectrum holdings. In March, Dish won the bidding for wireless broadband in all 176 U.S. markets auctioned by the Federal Communications Commission. The $1.56 billion bid leaves the company well-positioned to lease or sell the spectrum, partner with a wireless carrier, or even launch its own nationwide wireless network.

“Anyone with spectrum has some scarcity value,” said Andrew D. Lipman, a Washington-based partner at the law firm Bingham McCutchen. “They have the H Block of spectrum, which is paired five by five blocks of spectrum.” (Its spectrum runs from 1,915 MHz to 1,920 MHz for uplinks and from 1,955 MHz to 2,000 MHz for the downlink; Dish also controls the 40 MHz spectrum adjacent to the portion of the H Bock known as AWS-4.)

“Dish has the option of using AWS-4 as either uplink or downlink spectrum,” Lipman added. “Downlink is generally generally more valuable, but all this spectrum is value. There may be some auctions in the future but this is pretty much it, so it gives Dish an attractive asset. The old joke in Washington is that you can’t be too rich, too thin, or have too much spectrum.”

Which is one reason why AT&T wants DirecTV. As of November of last year, the service has 19 million subscribers compared to Dish’s 14 million.

“The merger with AT&T is a huge benefit for DirecTV granting them the ability to align viewing on satellite, wireless, and across multiple fiber optic streams,” Marder said. “This now opens the door to advance technology for simultaneous advertising experiences across multiple screens.”

DirecTV’s subscriber base is demographically different than Dish’s, Marder added.

“Although they both provide TV programming via satellite, DirecTV viewers tend to be more upscale,” she said, “with multiple premium additions to their service.”

And the possibility of Dish launching its own nationwide network? Unlikely, but not quite as far-fetched as it appears. In April, it was revealed that Dish had partnered with Artemis, a startup working pCell technology, which it claims could be faster than today’s 4G LTE networks.

“The one option that is least likely is the idea that Dish could build its own wireless network,” said Jeffrey Silva, independent telcom-media consultant. “You need scale to do anything in the U.S. market to play in this game right now. The scale that Dish has is in the pay-TV business where subscriber base has been sputtering at best. There is so much competition in this space.”

Which means Dish needs a partner and fast, Silva said.

“Charlie Ergen is a smart guy, and he’s a professional card player, but he has to know he only has so many cards to play,” Silva said. “He has fewer options today than even a year ago. Spectrum keeps him in the game but only for so long. It is one thing to have it, but quite honestly they need a partner, and it isn’t for a game of cards.”